Business this week

Standard & Poor’s downgraded its credit rating for the European Financial Stability Facility, the euro zone’s bail-out fund, cutting it by one notch to AA+. The move was triggered by S&P’s decision a few days earlier to strip France and Austria of their AAA status and further reduce the ratings of seven other countries in the currency block. S&P had given ample warning that the euro zone would receive a mass downgrade, but politicians reacted angrily, saying that it undermined their efforts to resolve the crisis. See article

As a result of S&P’s downgrade, Portugal joined Greece as the second euro-zone country to be accorded “junk” status by all rating agencies.

The outlook brightened somewhat for UniCredit’s rights issue when it emerged that a fund in Abu Dhabi was increasing its stake in the Italian bank to 6.5%. UniCredit’s share offering is a crucial test of the markets’ willingness to invest in the euro zone’s banks as they work to meet higher capital requirements by June.

Help is on the way

The IMF discussed ways to raise more funds from its member countries in response to the euro crisis. The fund is seeking an extra $500 billion on a voluntary basis to help meet the anticipated demand for bail-out loans.

The World Bank cited the threat from the rich world’s debt woes and consequential slowdown in capital flows to emerging markets in its latest assessment of the global economy. The bank now thinks GDP in the developed world will grow by 1.4% this year (down from a previous estimate of 2.7%) and by 5.4% in developing countries (down from 6.2%). See article

Federal authorities in America arrested seven people in New York, California and Massachusetts in connection with an alleged insider-trading scheme at several hedge funds. The scheme is said to have included trades in Dell. See article

Top of the heap

The worsening investment environment at the end of 2011 took its toll on the fourth-quarter earnings of America’s banks. JPMorgan Chase and Citigroup did worse than expected, posting declines in net profit of 23% and 11% respectively, compared with the same period in 2010. Goldman Sachs said its net profit was down by 58%. But Wells Fargo, which has a smaller investment-banking business than its rivals, saw net income jump by 21%, to $4.1 billion. See article

China’s economy grew by 9.2% last year, which was somewhat slower than the 10.4% it chalked up in 2010. The news came with the usual health warnings about the reliability of official Chinese growth statistics. Meanwhile, China’s stock of foreign- currency reserves fell at the end of the year for the first time since 2003, albeit by only $40 billion, to stand at a new total of $3.18 trillion.

The International Energy Agency reported that the demand for oil fell in the final quarter of 2011 for the first time since the depths of the financial crisis. The agency also noted the potential risk to oil supplies if new tensions with Iran lead to disruption to trade through the Strait of Hormuz.

Royal Bank of Scotland sold Aviation Capital, its aircraft-leasing business, to Japan’s Sumitomo Mitsui Financial Group for $7.3 billion. The sale will help RBS to reduce its non-core assets as it works to rectify its balance-sheet. Aviation Capital attracted several bids. With a fleet soon to reach 300, it is one of the world’s biggest lessors of aircraft.

Airbus said that 2011 had been its most successful year yet, as it delivered 534 aircraft to airlines and booked 1,419 net orders (new minus cancelled). That compares with Boeing’s delivery of 477 planes and 805 net orders, making it the fourth year in a row in which the European aerospace company has bested its American rival on both measures. Boeing, however, took more orders for bigger jets, thereby closing the gap in terms of revenue.

Jerry Yang resigned from the board at Yahoo!, which he helped to found in 1995 and led as chief executive for two years until January 2009. Once a shining star in the internet firmament, the Taiwanese-born Mr Yang had become a target of investor criticism at the troubled company. In 2008 his opposition to a $48 billion takeover bid from Microsoft brought him a heap of opprobrium; Yahoo! is now worth $20 billion. See article

Turn around?

Eastman Kodak filed for bankruptcy protection; the once-dominant photographic company has been struggling in the digital market. Kodak produced the first camera for consumers in the 1880s and in 1976 held 90% of the market for film. It listed $6.8 billion in liabilities in its bankruptcy, from which it hopes to emerge next year after selling off some of its patents. See article